State Street and JP Morgan won global custody mandates last week from Korea’s National Pension Service (NPS) in what is said to have been a two-phase bidding process.

The global equities portfolio is understood to be worth $35 billion and the global fixed income one $18 billion, as of August. Sources say the combined figure should to rise to a combined $70-80 billion in the next few years, citing NPS’s aim to boost its offshore exposure to 20%, from 16% last year.

In winning the equity custody mandate, State Street replaced Citi, which along with HSBC is thought to have made it to the final round of bidding. Citi provided custody services to NPS’s overseas equities investment for the previous three-year term.

Having been awarded the global fixed income custody mandate in 2010, JP Morgan has retained the contract for another three years. The bank declined to comment.

A source familiar with the $370 billion fund says it made its decisions based on fees, service levels and credibility, and that the contract periods will start in December.

It is understood that two other large global custodians, Brown Brothers Harriman and Northern Trust, also bid for the foreign mandates.

Sources say the NPS required each foreign bidder to bid in a custody fee range between 0.9 and 2 basis points. It is understood that all bid at the bottom of the range.

NPS declined to comment.

Chris Taylor, Asia-Pacific senior managing director at State Street based in Hong Kong, says the firm spent two years preparing its bid for the foreign custody from the NPS. 

“The fact that State Street has a local presence in Korea, understanding of the Korean law and the IT and operational infrastructure to support the complexity of [NPS’s] business model helped us secure the equity custody mandate,” he adds.

The global equities mandate will cover fund accounting and performance analytics services as well as custody.

NPS had also awarded domestic custody mandates in September, with Kookmin Bank scooping that for fixed income ($230 billion), replacing Korea Exchange Bank. KEB in turn won the mandate for alternatives ($19 billion), replacing Woori Bank.

Woori, too, did not walk away empty-handed, winning the mandate for domestic equities ($71 billion), replacing Shinhan Bank. The one domestic bank that retained its previous mandate is Shinhan Aitas, which provides fund administration for NPS’s domestic assets.

NPS is the world’s third largest public pension fund, after Japan’s $1.4 trillion Government Pension Investment Fund and Norway’s $800 billion state retirement fund, according to the Sovereign Wealth Fund Institute.